"Seven Giants" not enough? Retail investors flood SpaceX IPO, Wall Street presents "Top 10 AI Technology Giants"

null

Author: Claude, Deep Tide TechFlow

Deep Tide Guide: SpaceX's IPO last Friday attracted retail investors to net buy $117 million, accounting for 56% of all retail stock purchases in the U.S. on that day. Research firm Vanda proposed the new "FAB 10" concept based on this, advocating replacing the long-standing "Seven Giants" with leading AI and tech giants, including SpaceX, OpenAI, and Anthropic. The latter two are not yet listed, but market expectations are that they will go public later this year, with valuations potentially exceeding one trillion dollars each.

SpaceX's IPO debut is rewriting Wall Street's way of labeling tech stocks.

According to a report released last Sunday by Vanda Research, SpaceX's IPO last Friday was a huge success driven by retail enthusiasm, sparking renewed discussion about redefining the entire tech industry. Prior to this, the fundraising of about $75 billion was the largest IPO on record, with SpaceX priced at $135 per share, valuing it at approximately $1.75 trillion, making it one of the top ten most valuable publicly traded companies worldwide.

On the first day of trading, retail investors accounted for 56% of the entire market's buy volume

Vanda's data provides a quantitative perspective on this frenzy. The report states that SpaceX's IPO on its first day attracted retail net buying of $117 million, representing 56% of all retail stock purchases in the U.S. stock market that day.

This figure only reflects the buy-in on the secondary market on the first day and does not include retail funds participating in IPO allocations through brokerages. Additional data shows that in this $75 billion offering, retail investors ultimately received about 20% of the allocation, above the average; hedge funds received 10%, and long-term institutional investors took 70%.

Retail investors' concentrated bets further pushed funds toward a handful of mega-cap tech companies. Vanda believes these companies not only dominate stock market performance but also drive the entire wave of tech investment.

Vanda: Replacing the "Seven Giants" with "FAB 10"

Based on this judgment, Vanda proposed a new classification framework.

"If the past few years' market was dominated by the 'Seven Giants,' then last Friday might be the clearest signal yet—investors are beginning to focus on what we call the 'FAB 10,'" Vanda wrote in the report. FAB 10 stands for Frontier AI & Big Tech 10, referring to ten leading AI and tech giants.

According to Vanda, the FAB 10 expands the original seven giants by including SpaceX, OpenAI, and Anthropic. The latter two are not yet listed, but market expectations are that they will go public later this year, with valuations possibly reaching hundreds of billions or even trillions of dollars.

Vanda's reasoning is straightforward: these companies collectively represent the future direction of AI and the tech industry over the next decade.

The same concept, different versions from Bank of America

Vanda is not the only player packaging mega-tech stocks into a new index.

Earlier, Bank of America chief strategist Michael Hartnett proposed an "AI Big 10" portfolio in the "Investment Universe Guide." The difference from FAB 10 lies in the stock selection: Bank of America's version includes the seven giants plus Broadcom, AMD, and Micron, leaning more toward semiconductor hardware, while Vanda bets on unlisted AI model companies and SpaceX.

The divergence between these two lists essentially reflects different bets on "who will define the next decade." One side favors chip manufacturing, the other favors model development and rocket launching.

Retail inflows into SpaceX may be draining funds from chip stocks

Another side of the new concept is the redistribution of capital.

Vanda researchers pointed out that the enthusiasm for SpaceX might be diverting funds from other hot sectors, especially chip stocks that have previously surged, which may be losing favor among retail investors. In other words, within the FAB 10, the new members' ability to attract capital might come at the expense of older members' declines.

However, analysts also warn that the overall valuation of the tech sector already shows signs of a bubble. SpaceX's $1.75 trillion valuation at IPO is based on optimistic expectations for AI infrastructure, and how long this optimism can last remains to be seen by the market.